West Germany: A Perilous Swaying

The hum of West Germany’s economy has given off some static recently with the ominous crash of several industrial giants, including Automaker Carl Borgward and Shipbuilder Willy Schlieker. Last week another big one swayed perilously close to collapse.

Pressed by more than $18.5 million in debts. Industrialist Hugo Stinnes Jr., 66, a freewheeling and individualistic magnate who in only ten years has built a diversified $100 million empire in machinery, ships, electronics, plastics, oil, and filling stations, has been forced to sell off some of his choicest holdings to Munich Banker Rudolf Münemann. At week’s end Stinnes was brought into a crowded Bremen courtroom to answer a $4.5 million suit brought by a German mines association, which is trying to recover special compensations that the association claims were wrongly paid four years ago to one of his holding companies. Loss of the full amount could threaten Stinnes’ cash-shy empire with bankruptcy.

Hugo Stinnes—usually referred to as der Junior in German headlines—is the son of the famous Ruhr industrial baron who died in 1924, leaving his empire to be run by his wife and two sons. Hugo worked with his mother and brother Otto to rebuild the Stinnes holdings after World War II, but did not get along with his kinfolk. He set out to build an industrial complex of his own, calling one of his two holding firms “Hugo Stinnes Personally Inc.” to show his independence to the world. But Hugo depended too much on the memory of his father, and drove himself relentlessly to match old Hugo’s accomplishment. Like Borgward and Schlieker, he expanded too fast just for the sake of expansion, building on too narrow a capital base and not watching his profits closely enough.

Other German crashes have messily pulled down a lot of creditors, but the Stinnes contraction has so far proved surprisingly neat—thanks to Banker Münemann. As Münemann sees it, such firms as Stinnes often get into trouble “all because they let themselves be fooled for months by the greatest enemy which exists for a businessman: hope.” On Münemann’s advice, Stinnes last summer sold his gas-station chain to meet his immediate need for cash. When that was not enough, Münemann himself last month began buying what Germans call die Perlen—the pearls —among Stinnes’ manufacturing companies, notably the machinery and plastics producers. Brash and brainy Banker Münemann is playing an unaccustomed role as rescuer, and not entirely as a Samaritan; he is making some good buys for himself at distress prices. Nonetheless, his intervention may at least leave Stinnes enough to retire to—and enough to please the creditors—if Stinnes’ lawsuit can be favorably settled.